1999 (3) TMI 14

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....mmission to agents outside India who had procured orders. It claimed weighted deduction under the aforementioned provision in respect of such expenditure of Rs. 13,23,225. It was disallowed by the assessing authority, The Commissioner of Income-tax (Appeals) took a contrary view. The Income-tax Appellate Tribunal held that the Commissioner (Appeals) was not justified in allowing the said weighted deduction. From out of the judgment and order of the Tribunal, the following question was referred to the High Court for its consideration : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the applicant was not entitled to the weighted deduction under section 35B(1)(b)(iv) of the Act, in re....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....the Tribunal or any of the authorities concerned for claiming that an agency had been maintained by the assessee. In Chief CIT v. Mysore Sales International Ltd. [1992] 195 ITR 457 the Karnataka High Court took the view that the word "agency" in the aforesaid provision had to be read ejusdem generis with the expression "branch" and "office" used in the said provision. The meaning attributable to "agency" would, therefore, have to be something which had some flavour resembling that of a branch or office. That apart, the assessee had to maintain such agency for it was only such expenditure which could fall within the ambit of the said clause. The word "maintenance" could not be equated with the concept of payments made depending on the act....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....the provision was sufficiently satisfied "if there is an agent outside who promotes the sales of the assessee's exports". The High Court at Gauhati in CIT v. Assam Frontier Tea Ltd. [1997] 224 ITR 398 has followed the Calcutta High Court without assigning any independent reasons. The Kerala High Court in CIT v. Pooppally Foods [1986] 161 ITR 729 has taken the same view as the Calcutta High Court, but there is no discussion of the provision, apparently because the Revenue had never before chosen to raise the point that the expenditure there concerned would not fall within the ambit of the clauses in section 35B. The Gujarat High Court in CIT v. Cadila Laboratories (P.) Ltd. [1996] 221 ITR 35 referred to the meaning of the word "agen....